SOUTHEASTERN FIDELITY INSURANCE COMPANY, APPELLANT,
v.
LINDA JOYCE EARNEST N/K/A LINDA CASTILLO, APPELLEE
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Southeastern Fidelity Insurance Company appeals a judgment finding that the insured's unauthorized settlement with an underinsured tortfeasor did not prejudice the uninsured motorist carrier. The court affirmed, holding that a release of a judgment-proof defendant causes no compensable harm to the carrier's subrogation rights.
The court held that releasing a judgment-proof defendant does not prejudice the carrier because no reasonable person would expend costs and attorney's fees to obtain a judgment against an insolvent defendant. A technical or illusory loss of an uncollectible judgment cannot result in forfeiture of insurance coverage under the no-prejudice rule.
[1] An uninsured/underinsured motorist carrier is not prejudiced by an insured's unauthorized settlement and release of a tortfeasor if the tortfeasor is judgment-proof.
[2] A release of a tortfeasor is demonstrably immaterial to an insurer's ability to recover when the tortfeasor is insolvent.
Previewing 2 of 4 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“When Southeastern lost the opportunity to secure the judgment, it lost nothing. Under our law, a technical and illusory "loss" of this kind cannot result in the forfeiture of insurance coverage.”
Establishes the core holding that loss of an uncollectible judgment does not prejudice the carrier's rights and cannot forfeit coverage.
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Join FLexlaw to unlock all legal intelligenceMs. Earnest was injured by Mrs. Bradwell, a judgment-proof maid with $10,000 in liability coverage. Earnest's case was worth over $30,000 total (tortf…
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SCHWARTZ, Judge.
In accordance with our prior opinion in this case, Southeastern Fidelity Ins. Co. v. Earnest, 378 So. 2d 787 (Fla. 3d DCA 1979), the lower court conducted a non-juiy trial to determine whether Ms. Earnest could establish that the UM carrier, Southeastern, had not been prejudiced by her unauthorized settlement with and release of the under-insured tortfeasor, Mrs. Bradwell. The trial judge found that an absence of prejudice had been affirmatively established and accordingly entered judgment for Earnest.1 The judgment is affirmed.
There was overwhelming evidence that the negligent motorist, who was an impoverished maid, was completely judgment-proof.2 For this reason, the record fully supports the determination that the release was “demonstrably immaterial” to any otherwise-existing ability of Southeastern to recover. Bass v. Aetna Casualty & Surety Co. of Hartford, Conn., 199 So. 2d 790, 793 (Fla. 4th DCA 1967), cert. disch., 206 So. 2d 212 (Fla.1968); see also, Kaplan v. Phoenix of Hartford Ins. Co., 215 So. 2d 893 (Fla. 3d DCA 1968), cert. denied, 220 So. 2d 365 (Fla.1969). Based on the twenty year viability of a Florida judgment3 and the remote possibility that any debtor may eventually secure some funds with which to pay at least a part of it, the appellant argues that depriving a carrier of any judgment, however uncollectible, against any defendant, however insolvent, is necessarily prejudicial. Quite apart from the fact that its acceptance would completely negate the “no-prejudice” rule itself, as adopted in Bass, Kaplan and the earlier decision in this very case, this contention is so utterly contrary to common business sense and commercial reality as to be unworthy of any comment beyond summary rejection. A judgment against Mrs. Bradwell would not have been worth the paper it was printed on and no reasonable person would have expended the costs, let alone the attorney’s fees, it would have required to get it. When Southeastern lost the opportunity to secure the judgment, it lost nothing. Under our law, a technical and illusory “loss” of this kind cannot result in the forfeiture of insurance coverage.
Affirmed.
. In the light of our intervening decisions in Figueredo v. Leatherby Ins. Co., 392 So. 2d 287 (Fla. 3d DCA 1980) and State Farm Mut. Auto. Ins. Co. v. Colonial Penn Ins. Co., 379 So. 2d 1036 (Fla. 3d DCA 1980), the carrier does not contest the resolution against it below of the coverage question which remained open at the time of our first opinion. 378 So. 2d at 789.
. It was apparent, and the parties stipulated, that Ms. Earnest’s case had a value of more than $30,000, the total of the tortfeasor’s $10,-000 liability coverage and Southeastern’s $20,-000 UM protection. If the settlement with Mrs. Bradwell had not been effected, therefore, Southeastern’s subrogated $20,000 claim against her would have been junior to Ms. Earnest’s claim for the amount over $30,000 for which she would not have been compensated. Florida Farm Bureau Ins. Co. v. Martin, 377 So. 2d 827 (Fla. 1st DCA 1979). This renders it all the more obvious that the potential $20,000 judgment against Mrs. Bradwell would have been entirely worthless.
. § 95.11(1), Fla.Stat. (1979).
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Earnest v. Se. Fid. Ins. Co., 407 So. 2d 995 (Fla. 3d DCA 1981)…against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had. . Southeastern Fidelity Insurance Co. v. Earnest, 395 So. 2d 230 (Fla. 3d DCA 1981).…
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Gen. Accident Ins. Co. of Am. v. Taplis, 493 So. 2d 32 (Fla. 5th DCA 1986)…la. 4th DCA 1986); Gould v. Prudential Property & Casualty Ins. Co., 443 So. 2d 127 (Fla. 5th DCA 1983), [*33] review denied, 451 So. 2d 848 (Fla.1984); Tucker v. Seward, 400 So. 2d 505 (Fla. 5th DCA 1981); Southeastern Fidelity Ins. Co. v. Earnest, 395 So. 2d 230 (Fla. 3d DCA 1981); Kaplan v. Phoenix of Hartford Ins. Co., 215 So. 2d 893 (Fla. 3d DCA 1968), cert. denied, 220 So. 2d 365 (Fla.1969); McInnis v. State Farm Mutual Automobile Ins. Co., 208 So. 2d 481 (Fla. 4th DCA 1968); Bass v. Aetna Casualty & Su…
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Am. Fire & Cas. Co. & W. Am. Ins. Co. v. Bradford Sinz, 487 So. 2d 340 (Fla. 4th DCA 1986)…sagree.2 AFFIRMED. GLICKSTEIN and WALDEN, JJ„ concur. . The underlying facts in that case are stated sparsely and the court opinion cites (for the purpose of comparing and contrasting) its own opinion in Southeastern Fidelity Ins. Co. v. Earnest, 395 So. 2d 230 (Fla. 3d DCA 1981), a case in which the insured’s unauthorized settlement with the tort-feasor was viewed as creating only a presumption of prejudice and in which the insured was afforded the opportunity to and did establish factually that the insur…
Previewing 3 of 8 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited (11 total)
- Bass v. AETNA Cas. & Sur. Co. OF Hartford, 199 So. 2d 790 (Fla. 4th DCA 1967)
- Carlton Lee Fields v. State, 215 So. 2d 893 (Fla. 3d DCA 1968)
- Fla. Farm Bureau Ins. Co. v. Martin, 377 So. 2d 827 (Fla. 1st DCA 1979)
- Saye v. Patterson's Cold Storage & Aetna Ins. Co., 378 So. 2d 787 (Fla. 1st DCA 1979)
- Coleman v. Henry W. Brown & Sons, Inc., 220 So. 2d 365 (Fla. 1969)
- Phoenix OF Hartford Ins. Co. v. Gale Rubin Kaplan, 220 So. 2d 365 (Fla. 1969)
- In re Advisory Opinion to the Governor, 206 So. 2d 212 (Fla. 1968)
- State Farm Mut. Auto. Ins. Co. v. Colonial Penn Ins. Co., 379 So. 2d 1036 (Fla. 3d DCA 1980)
- AETNA Cas. & Sur. Co. OF Hartford v. Bass, 206 So. 2d 212 (Fla. 1968)
- Carvajal v. State, 392 So. 2d 287 (Fla. 2d DCA 1980)